TL;DR
- Tether’s profits from stablecoins are driving blockchain adoption and increasing demand for US government debt.
Full Story
You know those boring businesses you hear about every now and then that absolutely print money?
For example, Hunt Brothers Pizza, the gas station pizza business that makes $540M a year.
Well, stablecoins are kind of like that.
The leading stablecoin, Tether, has reported earnings of $5.2 billion so far this year. They achieve this by taking a small percentage of the money invested in their coin and reinvesting it to make a profit.
This is important for a few reasons:
The US government generates cash by selling IOUs with set interest rates. Other countries, like Germany, the United Arab Emirates, and Australia, see the US as a reliable debtor, similar to the Lannisters from Game of Thrones.
However, there is only so much US debt that other countries can or are willing to buy. The US is always in need of fresh cash.
Stablecoins like Tether extend the demand for US debt by allowing users anywhere to buy US dollars instead of their local currencies. This increases the reach of the US dollar, making it more accessible globally.
And this isn’t just a theory – it’s already happening. Tether alone now owns more US government debt than major countries like Germany, the United Arab Emirates, and Australia. This is driving blockchain adoption and revolutionizing the financial landscape.
It’s a fascinating development that showcases the power of stablecoins and their impact on the global economy.